Rupert Murdoch has lost an important News Corp ally after Prince Alwaleed bin Talal sold most of his stake, a move that could embolden dissident shareholders to challenge Mr Murdoch's grip on the media company.
Kingdom Holding Company, Prince Alwaleed's investment vehicle, sold about SR705 million (€165 million) of B shares, cutting its stake from 6.6 per cent to 1 per cent. It said it had decided to reduce its stake during a portfolio review, but gave no further explanation.
Kingdom has consistently supported Mr Murdoch, backing him during the phone-hacking scandal and in votes that have challenged News Corp’s dual-class structure, which has for decades secured the Murdoch family’s control.
News Corp shareholders staged their largest protest vote yet at the company’s annual meeting in November, when 47 per cent of them backed the scrapping of the structure.
Kingdom said in a statement that it had sold most of its shares in the first half of 2014, which could explain why Mr Murdoch’s margin of victory at the vote was so narrow.
"We were only a few percentage points away," said Laura Campos of the Nathan Cummings Foundation, the News Corp shareholder that proposed the motion. The foundation wrote to News Corp's lead independent director, Peter Barnes, in January to demand that the board address the scale of investors' unhappiness.
The Murdoch family has 39.4 per cent of the voting power at News Corp, even though it owns only 14 per cent of the company, which means it has had to rely on supporters such as Prince Alwaleed in tightly contested shareholder votes.
Kingdom will maintain its 6.6 per cent stake in 21st Century Fox, the entertainment group which separated from News Corp in 2013. Like News Corp, the Murdoch family controls Fox via a dual-class structure.- (Copyright The Financial Times Limited 2015)